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Investing in PR boosts a company’s chances of getting acquired

The ultimate goal of most company founders, owners, and investors is to have a liquidity event that rewards key stakeholders for their role in creating a successful company.

In other words, you’d love to be acquired by a big company that will pay a handsome premium for your firm.

With my first tech startup company that I co-founded, we sold the company for $10.5 million one year after getting a $750,000 venture capital round. The day the transaction closed was a glorious one for all of us who had worked tirelessly to build that software product and bring it to market.

Sadly, many good companies never reach that milestone event, because, in many cases, they underinvested in PR.

Failing to invest adequately in PR can prevent your business from being acquired. If you manage to get acquired without the help of public relations, odds are you’re leaving money on the table that would have been there if you had done a better job in promoting your company.

Why PR helps you get acquired

Prior to writing this story, I called a few of my contacts in investment banking and corporate acquisitions and asked them this simple question: How do you find corporate acquisition targets?

Here are some things they mentioned:

• We track industry news, looking for companies with potential.
• We attend industry events.
• We talk to industry analysts.
• We tend to know all the key players in our space that might make sense to acquire.

Put another way, with the exception of the last item, the people who might buy your company are learning about you through your marketing and PR efforts. If they don’t hear about you—if they don’t know you exist—the odds that they will want to acquire you are close to zero.

If you want to get acquired, invest in PR.

Invest even more in PR as you enter the final 24 months when you are packaging the company up for sale. Each media placement or analyst mention you get is a hook in the water that might catch the eye of a potential buyer.
The call starts something like this: “We saw your company mentioned again today in The Wall Street Journal. It seems like you are getting a lot of attention and we thought it might make sense to meet to discuss some strategic partnering options.”

Play your cards right and you can turn that call into a signed letter of intent to buy your company for a sweet price.

Of course, an even better scenario is if you are mentioned in the media and get multiple calls like that one. After all, the best way to get a high exit valuation for your company is to have multiple bidders competing to buy you. While it’s true that hiring an investment banker or business broker can help with that, we’ve seen good PR also attract multiple buyers to the table.

PR has always been a great way to build credibility. A positive mention in the press is an endorsement from a credible third party that says you are the real deal, not a pretender. Other PR venues—such as appearing in analyst reports, winning industry awards, or getting a speaking opportunity on a panel at an industry conference— can also put your company name in front of potential acquirers.

PR works because you’re not saying, “I’m great,” instead, it’s a respected outsider saying, “They are great,” which is much more convincing. That credibility and visibility is great for attracting customers, but it’s just as great for attracting investors and acquirers.

In addition to PR helping you get acquired and bringing multiple bidders to the table, public relations will get you a higher valuation price for the exit. If you’ve won a prestigious media award or industry accolade, tack on one or two million dollars to your sale price. Featured multiple times in major business media outlets and industry trade publications? Add a few more million to your selling price.

The acclaim you have built around your company has a value to it, and acquirers will pay extra for that value.

Ken Gaebler is the founder and chairman of Walker Sands, a full-service marketing and PR firm. A version of this story first appeared on the Walker Sands blog.